Tallulah
Prison Owners Still Get State Money:
3 with Edwards links made $9 million

05/22/01

By Steve Ritea

Capital bureau/The Times-Picayune

BATON ROUGE, LOUISIANA -- Even after rampant abuses forced
the state to seize control of the Tallulah Correctional Center for Youth in
1999, the three private owners of the facility, with ties to former Gov. Edwin
Edwards, might still be getting more than their fair share of state money,
a new audit suggests.

A report issued Monday by Legislative Auditor Dan Kyle
said the three men have made nearly $9 million from the facility since 1995
and will make $600,000 this fiscal year. The state payments are scheduled
to continue until construction bonds for the juvenile prison are paid off
in 2012, after which the three men will retain ownership of the facility.

Kyle noted that the men formed a company to build and
operate the prison, and the state paid them a rate based on the number of
inmates housed there.

"When the state took over the facility, the rate
paid to the company was reduced," he said. "The question now is:
Was the reduction enough? And if the company is making abnormal profits, then
the appropriation could be reduced to a level where they made only normal
profits."

Kyle said the Legislature has the power to reduce the
payments, which were negotiated by the Foster administration. That appropriation
is included in the 2001-02 state budget, which comes up for debate in the
House today.

Sen. Donald Cravins, D-Arnaudville, chairman of the Senate
Judiciary B Committee and a frequent critic of the Department of Corrections,
said he plans to hold lengthy hearings on the issue after the session.

"In my mind, I just don't know how the heck you justify
putting together a contract like that," Cravins said.

In 1994-95, during Edwards' last administration, Trans-American
Development Associates was selected to build and operate the Tallulah youth
prison"even though the company had no prior experience constructing or
operating correctional facilities," the audit said.

That company is owned by George A. Fischer of Metairie,
Edwards' former campaign manager; Verdi Adam of Baton Rouge, head of the state
highway department under Edwards; and James R. Brown, a friend of Edwards
and son of the late state Sen. Charles Brown of Tallulah.

Edwards told auditors that he was not involved in the
selection of Trans-American, but he had Department of Corrections Secretary
Richard Stalder meet with Fischer and Brown. Although Fischer "probably
spoke with him (Edwards) about the arrangement," the former governor
said he left the arrangement "up to Secretary Stalder's discretion,"
according to the audit.

Stalder told auditors he left the decision up to Donald
Walker, who was then mayor of Tallulah, the report says.

Walker said he was approached by Brown. Brown said Walker
asked him for help with economic development in Tallulah, according to the
audit.

In 1995, the state agreed to pay the company $52.88 per
inmate per day and then $62.88 when an additional portion of the prison was
completed, housing a maximum of 686 youths.

But in 1997, the contract was amended under the Foster
administration to make sure the company continued to receive payments even
if the state took over Tallulah.

The arrangement guaranteed payments of $16.62 per day
for each of 686 inmates, regardless of how many actually were housed there,
the audit says.

The same day the contract was amended, the owners of Trans-American
refinanced their debt and obtained $7.6 million in additional funds. The following
day, the company paid its three owners $2 million in dividends, according
to the audit.

The amendment took effect in September 1999, when a variety
of abuse complaints -- ranging from beatings and inadequate clothing to failure
to provide education and appropriate health care -- prompted a state takeover
of Tallulah.

The per diem rate, increased to $17.10 in 2000, continues
to be paid for 686 youths, although a federal court reduced the maximum capacity
to 440.

Stalder disputes the characterization that the state is
paying for empty beds.

"We are paying for buildings that were originally
designed to house offenders that are now utilized to provide space for administrat(ors),
. . . the Boys Club, and medical and mental health services," he wrote
in response to the audit. "We use every square foot of the facility.
We are not paying for offenders not actually housed at the facility. We are
paying for beds built,' not beds occupied.' "

The Legislature can cure "any perceived disproportionality"
by reducing those payments, he said.

Officials at the Juvenile Justice Project of Louisiana,
a watchdog group monitoring youth prison conditions, said the audit suggests
"this facility was set up with money in mind and not our kids in mind,"
said Derwyn Bunton, an attorney with the organization.

Problems have persisted since the takeover, Bunton said,
including reports of inadequate supervision by guards, fostering more youth-on-youth
violence.

"Our patience is wearing thin with their ability
to properly run the facility," Bunton said.

Stalder said Tallulah has vastly improved since the takeover.
Tallulah houses many violent offenders, and altercations are not always avoidable,
he said.